SAMPLE - Compass International · The Buy Out / Procurement Procedure Purchase ... Some major issues to keep in mind regarding Purchasing / Procurement and ... • Various Procurement

2018International

Procurement Yearbook10th Edition

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Copyright © 2018 Compass International, Inc.

01

ConTEnTS

PREFACEABouT THE FIRM

Section 1GloBAl ConSTRuCTIon PRoCuREMEnT ToPICSTrends and issues we will see in 2018 and beyondProcurement / Project Delivery Methods and IssuesRecent History and the influence of World Events on Engineering and Construction Costs in the last couple of decadesProject ExecutionConventional approach: / Concurrent / Overlapping approach / Fast track approach Various Types of Construction Projects: How do Purchase Orders vary from Contracts - Engineering, Procurement and Construction (EPC)List of Data / Engineering Deliverables supplied to Vendor to obtain fixed price quoteThe Importance of Front End Planning Defining the Project and the CAPEX Project Life Cycle ProcessProject Team and Selection of Professional ServicesGlobal Construction Procurement Purchasing / Contracting Challenges to be faced in the next couple of decades and beyond

Section 2PuRCHASInG / PRoCuREMEnT And ConTRACTInGFacility Procurement StepsSpecificationsThe Buy Out / Procurement ProcedurePurchase OrdersContractsRequest for proposals (RFP)The General Purchasing / Procurement Planning ProcessFundamentals of the Purchasing / Procurement / Contracting PlanEstablishing Potential Bidders List / Pre-Qualify Bidders and Recommend list of Pre-approved EPC, A/E, CM firms, contractors and vendorsPrepare Invitation to Bid Packages, Purchase Orders, and Contracts / Sub-Contracts etc.Evaluation and Award of Purchase Orders Construction Contracts / Sub-Contracts / Service ContractsPurchase Order / Construction Contract AdministrationThe Materials / Equipment Procurement / Purchasing Responsibility MatrixPlanning for Commodities - Bulk / Prefabricated / Consumable MaterialsMajor Equipment (Process – Production Equipment) PlanningFront End Quality PlanningInstituting a Quality Control PlanSetting up and establishing an Inspection / expediting planSome major issues to keep in mind regarding Purchasing / Procurement and Contracting

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45 Section 3PuRCHASInG ACTIVITIESPurchase Orders vs. ContractsThe Project Team / OrganizationHome Office Procurement GroupThe Four Step Purchasing – Procurement – Contracting processPurchasing – Procurement – Contracting. Job descriptionsPurchasing – Procurement – Contracting StrategiesProposals / Bids / Request for Proposals (RFP) / Tender EvaluationsConclusion / Purchasing – Procurement – Contracting Tips

Section 4QuAlITY ConTRol (QC/QA), SAFETY, InSPECTIon, EXPEdITInG & TRAnSPoRTATIon ACTIVITIESGeneral standards / specificationsQuality Assurance/Quality Control Basic StepsSubmittals, Product Data and Shop DrawingIssue and Approval of Shop Drawings and SamplesThe shop drawing / submittals approval cycleExpediting ChecklistTransportation Issues

Section 5ConSTRuCTIon ConTRACTS & ConTRACT AdMInISTRATIonFive fundamental contract typesFixed Price / Hard Money / Competitively BidNegotiatedDesign-BuildReimbursable Contracts / Cost-Plus / Pass through ContractSchedule of Rates / Unit Price ContractRequest to bid letter / Request for proposal cover letterRequest for Quotation (RFQ)Instructions to biddersBid opening / Analysis / RecommendationInternational Construction ContractsSample contractsSample Design / Build Agreement related to Manufacturing Facility ExpansionRe-cap of main items

Section 6InTERnATIonAl PRoCuRMEnT ISSuESGlobalizationChecklist of issues when working in an overseas countryOverseas Business PracticesImport Permits / Government ProceduresCurrencies and Exchange RatesMetric ConsiderationsLanguage DifferencesSpecial Considerations for Working in Developing CountriesFinal Thoughts on International Procurement

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Section 7CounTRY dATA & 2018 GEnERAl noTESAfghanistanAlbaniaAlgeriaAngolaArgentina ArmeniaAustraliaAustriaAzerbaijanBahrainBangladeshBelarusBelgiumBelizeBeninBhutanBoliviaBosniaBotswanaBrazilBulgariaBurkina FasoBurundiCambodiaCameroonCanadaCentral African RepublicChadChileChinaColombiaCongo Democratic RepublicCosta RicaCote D’ IvoryCroatiaCubaCyprusCzech RepublicDenmarkDominican RepublicEcuador EgyptEl SalvadorEritreaEstoniaEthiopiaFinlandFranceGabonGambia (The)

103103104105106107108109110111112113114115116117118119120121122123124125126127128129130131132133134135136137138139140141142143144145146147148149150151152153

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GeorgiaGermanyGhanaGreeceGuatemalaGuinea - BissauGuineaHaitiHondurasHong KongHungaryIndiaIndonesiaIranIraqIsraelItalyJamaicaJapanJordanKazakhstan KenyaKuwaitLaosLebanonLibyaMadagascarMalawiMalaysiaMaliMexicoMongoliaMoroccoMozambiqueNamibiaNepalNetherlands (The)New ZealandNicaraguaNigerNigeriaNorwayPakistanPanamaParaguayPeruPhilippinesPolandPortugalRomaniaRussiaRwandaSaudi Arabia

154155156157158159160161162163164165166167168169170171172173174175176177178179180181182183184185186187188189190191192193194195196197198199200201202203204205206

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SenegalSouth AfricaSouth KoreaSpainSudanSwedenSwitzerlandSyriaTajikistanTaiwanThailandTogoTunisiaTurkeyUkraineUnited Kingdom United States of AmericaUzbekistanVenezuelaVietnamYemenZambiaInternational freight costs

Section 8GloSSARY oF InERnATIonAl PRoCuREMEnT TERMS

And PRoCuREMEnT RElATEd FoRMS

207208209210211212213214215216217218219220221222223224225226227228229

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PREFACE

The 2018 International Procurement Yearbook: provides current data related to 125 overseas countries that will provide the reader with present day purchasing / procurement and contracting information, the publica-tion will be added to and updated on an annual basis. The yearbook contains data on:

• The Importance of Procurement• Procurement Definitions• Current International Procurement Trends• Global Procurement issues and challenges• Purchasing / Procurement and Contracting methods and subject matter• The Buy Out / Procurement Process• Commodity (Bulks) Procurement / Purchase Orders and Contracts• The General Purchasing / Procurement Front End Planning Development• The Essentials of the Purchasing / Procurement / Contracting Planning• Establish Potential Bidders List / Pre-Qualify Bidders and Recommend list of Pre-approved EPC, A/E, CM firms, contractors and vendors• Contract Administration methods and procedures• Information / Data that should be considered when formulating the Purchasing / Contracting / Subcontract Execution Plan• Planning for Commodities - Bulk / Prefabricated Materials• Major Equipment (Process – Production Equipment) Planning• Instituting a Quality Control Plan• Procurement Tasks and Activities• Organizational issues / Purchasing Roles and Responsibilities• Quality (QC/QA), Safety, Inspection, Expediting and Transportation Considerations• Checklist Quality Assurance (QA) /Quality Control (QC) Issues• Submittals, Product Data and Shop Drawings• Construction Contracts and Contract Administration• Invitation to Bid / Instructions to Bidders / Bid Package Documentation• Bid Evaluation / Analysis Review and Recommendation• International Construction Contracts and Issues• Samples of International and USA Construction / Consulting / Construction Management Agreements• Overseas Business Practices / Import Permits / Government Procedures• An overview of 125 countries procurement issues (includes, country map, economic data, taxes, inflation rates, salaries and wage rates, government addresses, import duties, freight costs and transport durations, major seaports, exchange rates, etc.• Glossary of International Procurement Terms• Various Procurement Forms

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About the Firm: Compass International Consultants Inc. was founded in 1992 (C.I.C.I), and is a provider of estimating services, international construction cost data, location factors, training seminars, procurement intelligence, data and advice, value engineering, estimating support and conceptual construction economic cost data. Compass International is backed by an excellent staff of experienced Cost Engineers, Cost Esti-mators, Civil / Mechanical / Chemical Engineers and Economists.

Web site: http://www.compassinternational.net

Mailing Address:Compass International Inc.P.O. Box 1295Morrisville, PA. 19067 USA Telephone / Fax (215) 504-9777E Mail [email protected] [email protected]

Acknowledgements: This data source is the result of more than fifteen years of research and data collection. The data is based in part on Compass International’s data library, various government agencies data, global quasi-governance organizations information, various national libraries around the world, various govern-ment information desks / trade promotion departments, augmented by numerous trade magazines, profes-sional association articles, an assortment of newspaper / magazine articles, almanacs / reference books, in-ternet data and various construction / procurement related publications. We would like to express our sincere thanks to the many engineers, contractors, vendors and other individuals (friends and colleagues), too many to mention, who have given freely of their advice, input, time and knowledge so that this data source could be produced. We welcome any comments or data that could be used in future updates to make this database more complete and accurate.

Copyright © 2006 – 2018: By Compass International. All rights reserved. This information may not be reproduced or transmitted in any means, electronic or mechanical, including photocopying, scanning, copying and pasting, recording, or by any information storage or retrieval system without permission. Compass International makes no warranty or guaran-tee as to the accuracy and completeness of the procurement data contained in this publication and assumes no liability for damages that are incurred by utilizing the data contained within this publication. The data is based on data known and collected in the 4th Quarter of 2011. Global economic situations and world events impact currency exchange rates, escala-tion, billing rates. Procurement data changes rapidly so use this data with care. The best application and use of this data is to use it in concert with latest procurement data from specific countries, if that data can be obtained.

Contributing Editors: Sharon CurlReed McConvilleAndrew McConvilleKyle McConvilleCompass International, December, 2017

ABouT THE FIRMSAMPLE

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General Information, data / Engineering deliverables TYPICAllY SuPPlIEd To VEndoR To oBTAIn FIXEd PRICE / unIT PRICE QuoTE

REFEREnCE no. TASK / dESCRIPTIon

1 Owners Purchasing Agent / Contact person2 Telephone / E Mail Address / Fax #3 Contact for Technical Questions4 Contact for Commercial Questions5 Project Name / Location / Reference Number6 General description of items required7 FOB Point / Works Location8 Item # / Cost Code9 Quantity of materials / items needed (Tons, LF, #, etc.)10 List of specifications, country codes and standards that materials / components will conform to11 List of drawings that materials / equipment will correspond to / conform to12 Date when materials / components must be delivered to site13 Listing of QA/QC requirements that order will comply to14 O/M documentation requirements15 Submittals / Shop Drawings requirements16 Special packing instructions17 Purchase price, fixed price or unit price basis18 Discount 19 VAT / GST Other Taxes included or excluded20 Domestic Freight costs / Ocean Freight costs21 Tariffs / Import duties22 Customs requirements23 Escalation / Increased cost formulae if applicable24 Weight of order Pounds - Kg / 25 Size CF – M326 Inspection requirements27 Insurance included or excluded28 Shipper / Freight Forwarding Agent29 Validity of proposal30 Required warranty period (1 year or 2 years)31 Transport / Freight Carrier Information32 P.O. Terms and Conditions (Payment Terms)

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hen planning the Purchasing / Procure-ment and contracting effort of a new facility or building, it is essential to be acquainted with the bond connecting

the detailed design effort and the execution of the construction program. These developments (detailed design – the drawings and specifications) and the procurement and construction effort, can be consid-ered as an integral routine, that are linked together. The detailed design effort is a course of action of fashioning a depiction of a new facility or building; this is characterized by drawings (general arrange-ments, plot plans, sections and the like) and various specifications. The procurement (buy out) effort is self explanatory. The construction effort is the activity of deploying labor and material resources that match / meet the intent / requirements of the drawings (general arrangements, plot plans, sec-tions and the like) and various specifications that are produced to complete the new facility or building. More than a few circumstances are exclusive to the Purchasing / Procurement and Contracting of new facility / building, it is important that these situations / circumstances be considered and planned for in the engineering and execution phase of the new facility / building. These situations / circumstances include some or all of the following points.

• Just about every new facility or building is unique; the design effort requires new drawings and specifications that are specific to the new facility or building.

• The project team is assembled usually for the project; many times these individuals will not work together again. There is typically a steep learning curve at the commencement of a new facility or

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Purchasing / Procurement and Contracting

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building.• The detailed design, procurement and construc-

tion of the new facility or building have got to fulfill the needs / requirements / site specific circumstances of the owner, considerations for future expansions should also be a consideration.

• The typical engineering (design), procurement and construction of a new facility or building takes between 12 – 36 months, the sooner the new facility or building is completed and in use, the sooner the owner is making a return on his or her investment.

The following listing should provide the reader with an overall appreciation of the multifaceted steps / activities that need to be considered and planned for by the owner to ensure a cost effective and timely procurement approach.

FACIlITY PRoCuREMEnT STEPSSee chart next page.

The acquirement of a constructed facility / build-ing, more often than not, embodies a major capital investment; this is the case if the owner / end user is a private citizen(s), a private firm, fortune 500 com-panies or a government agency. The new facilities / buildings are planned / anticipated to meet specific objectives of the stipulated goals requested by the owner / end user together with the need to comply with applicable codes, regulations and laws. Pur-chasing / Procurement / Contracting and Materials Management are critical elements in project man-agement, planning and the monitoring and control of a constructed facility / building. Major Equipment (Process – Production Equipment and other equip-ment items) and materials embody a major cost in construction, optimizing purchase / procurement /

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26. | SECTIon 2


intends to use; the consequence of this selection ap-proach will many times will have an influence on the final cost and the final completion date of the con-struction project. Scores of construction projects are delayed many times because of tardy ordering and delivery of materials, equipment or services to the site. The number one reason for these delays is that not enough front end planning is completed; early front end planning can many times optimize this situation. Before the initiation of any construction activities, a detailed purchasing / procurement / contracting plan should be integrated into the over-all project execution plan, show-ing start and finish dates for the Inquire, Negotiate and Purchase (INP) for Purchase Orders, Con-struction Contracts and any other professional services contracts.

Figure 2.1 shown below is an illustration of an overall Engineering (Detailed design), Procurement and Construction (EPC) project that shows the over-

lapping EPC activities specific to a twenty month EPC effort. The illustration shown is a typical “ge-neric” overall project plan related to the construction of a medium sized manufacturing facility in North America or Western Europe and demonstrates the various interactions and sequences between engi-neering, procurement and construction.

FundAMEnTAlS oF THE PuRCHASInG / PRoCuREMEnT / ConTRACTInG PlAn

The purchasing / procurement / contracting or material manage-ment plan (refer to earlier com-ments), which is part of the plan indicated in Figure 2.1 below, must act within the context of the overall project implementation ap-proach. The Purchasing / Procure-ment / Contracting Plan should

mesh with the total project goals, i.e. schedule, cost, quality and safety issues.

The number one reason for these delays is that not enough front end planning is completed; early front end planning can many times optimize this situation.

FIG. 2.1

EPC ACTIVITIES

detailed design

Buildings

Process A

Process B

Off sites

Buy-out / Procurement

Major Equipment PO ‘s

Bulk materials

Sub-Contracts

Construction

Buildings

Process A

Process B

Off sites

Facility Start-Up

MonTH j F M A M j j A S o n d j F M A M j j AMonTH # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

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• Construction contracts and sub-contracts• Request for information• Document control• Shop drawing / submittals• Change orders / claims• Expediting / shipping and receiving reports• Invoices• Release of liens• Contract close out sign off sheetThe reader is advised to become familiar with

these terms when involved with the Purchasing / Contracting process.

THE MATERIAlS / EQuIPMEnT PRoCuREMEnT / PuRCHASInG RESPonSIBIlITY MATRIXThe Figure 2.2 below is an illustration of equipment and commodities / bulk materials procurement / purchasing responsibility matrix associated with the construction of a new production facility, the respon-sibility matrix depicts which organization (Owner, EPC Contractor or sub-contractor) is responsible for the procurement / purchasing effort of each specific scope item. The procurement / purchasing responsi-bility matrix is usually compiled in the early stages of the project, it is fined tuned a number of times to make sure that no major scope items are overlooked or missed in the buy out process.

* EPC Firm will free issue all Process Pipe,

Fig. 2.2buy-out ownEr EPc civil / bldg mEchanical ElEct / controls co-gEn RESPonSIBIlITY FIRM ConTRACToR ConTRACToR ConTRACToR ConTRACToR

Reactors (Long Lead Xitems R100, 101, 102) Ohio Plant Refurbished X Equipment Columns / Trays X Pumps X Compressors X Heat Exchangers X Vessels / Tanks X Laboratory Equipment X Spare Parts X Engineered Bulks X(Free Issued) * Civil works / Foundations X Roads X Structural Steel (Fabricated) X Admin Building incl. Xplumbing / sprinklers Warehouse (Pre-Eng) X Workshop X Mechanical Installation X All Process Pipe X Set M.E. X Electrical / Controls X ditto / Security Systems Insulation ditto X Paint ditto X Co-Gen Facility (Design - Build) X

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FIG. 3.2SITE MAnAGER

PRoCuREMEnT MAnAGER

ConTRACTS MAnAGER / AdMInISTRAToR

• contracts• sub-contracts• sErvicE ordErs

dESIGn PRoFESSIonAl(S)

A/E – EPCM FIRMPRoFESSIonAl(S)

VEndoRS / SuPPlIERS oF MATERIAlS & EQuIPMEnT A/E –

EPCM FIRM

FIG. 3.3

(1). PlAnnInG.dETERMInE THE SCoPE oF THE PuRCHASInG –

PRoCuREMEnT – ConTRACTInG

EFFoRT.

(2). SolICITATIon / PRE – QuAlIFICATIon. PRoduCE BId doCuMEnTS And IdEnTIFY PoTEnTIAl

ConTRACToRS And VEndoRS, nEGoTIATE

BEST TERMS And CondITIonS

(3). ConTRACT AdMInISTRATIon.EnSuRE SuBMITTAlS,

QuAlITY And FInAnCIAl TERMS oF

PuRCHASE oRdERS And ConTRACTS ARE FullY

CoMPlIEd wITH.

(4). CloSE ouT ACTIVITIES.

RETEnTIon RElEASEPunCH lISTS

o/M MAnuAlSback-chargEs

wARRAnTY ISSuES.

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he thought process related to the Purchas-ing / Procurement / Contracting choice and approach should be carefully consid-ered; the selection criteria should take into

account the urgency for the need of the project, the local market conditions, the sophistication of the de-sign, the relative risks, the projects “team’s” staffing requirements, together with the team’s experience / knowledge and the projects size and complexity. Regardless of what Purchasing / Procurement / Con-tracting method is eventually selected, a sufficient amount of time and resources should be allocated to the Purchasing / Procurement / Contracting front end planning effort. User friendly - workable procedures specific to Purchasing / Procurement / Contract-ing for each construction project should be created to assess the cost, schedule and quality of all bids (purchase orders and contacts) for materials, produc-tion equipment and related services. The Purchasing / Procurement / Contracting procedures need to be evenhanded, ethical, non - discriminatory, economi-cally sound, timely, fully transparent and of course auditable.

What is “Project Execution” – it is generating an idea (concept) for a new or upgraded facility / building, and turning the idea into a usable build-ing (or facility). Project execution is a complicated subject that needs to be carefully considered and planned for. A construction contract, many times, is the vehicle used to make this idea or concept come to fruition.

In plain terms, a contract is an agreement be-tween two or more parties to perform a specific activity or task, which is legally binding on the parties to the contract to complete. A contract can be

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Construction Contracts & Contract Administration

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a purchase order (a one or two page document), or it can be a ten – thirty plus page document. A con-tract is used, many times, where the implementation involves multifaceted scope (work) items, that many times need the use of labor and plant at a construc-tion site to fabricate and installed various construc-tion related components, and where activities are co-dependent on other activities, i.e. the foundations need to be installed before the mason can install his brickwork.

A contract (agreement) is a legally enforceable pledge or agreement formally binding / connecting two or more individuals, groups, or organizations. A contract or agreement delineates the obligations and rights of the parties to the contract. A construc-tion contract, many times, is a contractual arrange-ment between the owner company and the contrac-tor, where the contractor agrees to build a facility / building in accordance to specific contract docu-ments (drawings and specifications) for a sum of money. These drawings and specifications, referred to as the contract documents or design deliverables, are more often than not prepared by an independent third party, such as an Architectural or Engineering firm (A/E). The contractor will complete the work described / portrayed in the drawings in accordance with the specifications for a predetermined price (for example, this could be for a fixed lump sum or perhaps a not to exceed value, there are numerous project execution methods), the owner will usually specify when he or she requires the construction work to be completed. When the owner and con-tractor signs on to this agreement, the resulting end product is a legally enforceable construction con-tract.

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BRAZIlBrazil is the largest and most prominent country in South America. It is forecast that Brazil will be one of the top three or four countries in the next decade or two; up there with the likes of the USA, China and India It is rich in minerals, oil, gas, ethanol (sugar cane) and timber. Brazil has a very skilled and productive labor force, which will serve it well in the decades to come.

dATA TABlE1. Type of Government: Republic2. Capital: Brasilia 2,800,0003. Major Cities: Sao Paulo, Santos, Rio de Janeiro, Recife4. Population: 207.3 million 5. Area: 8,512,000 sq km6. GDP: $1,550 billion7. GDP per Head: $15,2008. Inflation Rate: 5% – 8%9. Time: + 2 EST10. VAT / Sale Tax: 17%11. Exchange Rate: 3.16 Real 12. Freight from USA: 7.5 – 10.5 / 23 days13. Local freight: 2% - 3% of material / equipment purchase price14. Government website: http://www.brasil.gov.br http://fazenda.gov.br15. Import duties: Refer to website mentioned above under General Notes, note 1516. Electricity: 110 / 220 v – 60 Hz17. Telephone code: 5518. Professional Architect / Engineer / Accountant / Purchasing Agent etc: $44 - $6819. Skilled Worker rate: $12 - $2320. Unskilled worker rate: $6 - $1121. Worker Productivity vs. USA Gulf Coast (Houston = 1.00): 1.30 – 2.6522. Location Factor vs. USA Gulf Coast (Houston = 1.00): 0.90 - 0.9223. Local Bulk Material Factor vs. USA Gulf Coast (Houston = 1.00): 0.85 – 0.9524. Major Sea Ports: Santos, Rio de Janeiro

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MEXICoLocated south of the USA and north of Guatemala and Belize. With the advent of NAFTA a free trade pack with Canada and the USA, trade has just about quadrupled since 1994, the year NAFTA was imple-mented. Mexico does have a young hardworking workforce. Mexico has a serious drugs problem that has resulted in 100’s of police / army and drug traf-fickers being killed in the last two or three years.

dATA TABlE1. Type of Government: Federal Republic2. Capital: Mexico City 9,000,0003. Major Cities: Tampico, Ciudad Juarez, Oaxaca, Guadalajara, Monterrey, Mexicali4. Population: 123 million5. Area: 1,972,470 sq km6. GDP: $1,170 billion7. GDP per Head: $18,4508. Inflation Rate: 2.75% - 3.75%9. Time: - 1 EST10. VAT / Sale Tax: 16%11. Exchange Rate: 17.78 Mexican Peso12. Freight from USA: 4.5 – 7.5 / 2 - 5 days13. Local freight: 2% - 3% of material / equipment purchase price14. Government website: http://www.trace-sc.com/govt_online.htm http://www.presidencia.gob.mx/en 15. Import duties: Refer to website mentioned above under General Notes, note 15 and http://portal.sre.gob.mx16. Electricity: 120 v – 60 Hz17. Telephone code:5218. Professional Architect / Engineer / Accountant / Purchasing Agent etc: $25 - $5019. Skilled Worker rate: $11 - $1820. Unskilled worker rate: $7 - $1021. Worker Productivity vs. USA Gulf Coast (Houston = 1.00): 1.40 – 2.3022. Location Factor vs. USA Gulf Coast (Houston = 1.00): 0.90- 0.9523. Local Bulk Material Factor vs. USA Gulf Coast (Houston = 1.00): 0.85 – 0.9224. Major Sea Ports: Veracruz, Tampico, Acapulco

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for each trade or skill.• Deed: A legal document used to transfer own-

ership of a specific item or article.• Defect: An item that does not conform to a

specific requirement(s).• Deliverable: A product or report that must be

furnished to satisfy a contractual requirement.• Delivering carrier: The transport carrier that

delivers the materials and equipment to the pur-chaser.

• Delivery: The act of transferring ownership; applied to shipping, it occurs when lading is surren-dered and title, materials, and equipment pass to the buyer.

• Default: A failure by a signatory to a legal con-tract to act in accordance with the stipulated terms and conditions of that said contract:

• Demurrage: A financial charge on freight cars, vehicles, or ships held by or for consignor or consignee for subsequent loading or unloading activities.

• Detail specification: A comprehensive de-scription of the requirements for a specific article of material or equipment.

• D.F.: Damage free• D.T.: Direct transfer• Discount: A sum of money or deduction of-

fered by the seller to the buyer that reduces the cost of the item purchased when certain conditions are met by the buyer (e.g., prompt payment within a stated time period).

• Distribution: The broad of activities based on the efficient transportation of finished materials and equipment from the end of the production line to the eventual buyer.

• Dock: The loading or unloading ramp at an industrial facility or factory. Also a pier or wharf for the receiving and embarking of ocean going vessels.

• Draft: A legal document directing one indi-vidual to pay another.

• Due date: The date when purchased materials and equipment are to be available for installation at the construction project.

• Dunnage: Protective devices used around ma-terials or equipment to prevent movement, damage, or breakage while in transit.

• Duty: The charge or value assessed by a gov-ernment on materials and 1equipment imported or exported.

• Earnest money: Money that one party gives to another at the time of entering into an agreement to “seal the deal.” Earnest money can be forfeited if a contract is not concluded.

• E.C. / (E.U.): European Community / Union• E.D.O.: Equipment dispatch order• Embargo: An order of a government to pro-

hibit trade with a specific country.• Engineer: A design professional who by edu-

cation, training, and experience is knowledgeable in the skill and technology of engineering and the design of specific elements.

• Errors and omissions excepted (e and o.e.): Indicated on invoices(s) or other statements to safe-guard the originator’s right to amend or modify the value if error is found.

• Escalation: The value of adjustment permitted by an inflation clause; an allowance for an anticipat-ed increase in the cost of equipment, materials, and labor as a result of continuing price inflation encoun-tered over time.

• Escalation clause: A contract clause that pro-vides for a price adjustment based on specific price changes.

• Ex: (Ex Mill, Ex, Factory, Ex Dock): Prefix used to denote point of origin. When a seller quotes a price Ex, the seller quotes only to make the materi-als and equipment available at the Ex point of origin and include no transportation costs in the proposed prices.

• Excess freight: Freight exceeding that indi-cated on the original freight carrier bill.

• Excise tax: A tax on the manufacturing, sale, or use of certain articles made, purchased or used within a country.

• Eximbank: The export-import bank of the U.S.• Expediting: Activities taken, or to be taken,

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SAMPLE - Compass International · The Buy Out / Procurement Procedure Purchase ... Some major issues to keep in mind regarding Purchasing / Procurement and ... • Various Procurement