Hydrocarbon Processing - November 2021 - 35

Engineering and Construction
ties. This is particularly important with
complex projects or in cases where delivery
requirements are unique and critical.
Limitations of each approach. The
limitations of each procurement document
may be obvious from this article.
However, to reiterate, a PO is the simplest
document used in making a project purchase,
but it may not be sufficiently detailed
enough with respect to the contract
requirements. A PO does not become a
contract until it is accepted by the seller.
Conversely, a contract ensures an early
agreement between the buyer and seller.
Additionally, contracts tend to be more
comprehensive-entailing risks, schedules,
scopes, etc.-and may be viewed as
cumbersome for simple purchases.
Takeaway. Project procurement is generally
the major factor determining whether a
project stays on track financially. The lowest
price is important for the buyer; however,
factors such as quality and timely delivery
are very critical, and all details must be
holistically considered. The challenge is to
select a procurement document that provides
the necessary protection but that is
not overly burdensome or complicated for
the buyer and seller. By applying the guidelines
presented here regarding the selection
of a PO, contract or purchase agreement,
the strong points of each document are
clear and there is an understanding of any
limitations. At the end of the day, procurement
is not the only driver for a successful
project, but it certainly is a key activity influencing
project metrics. A sound strategy
that is executed properly will eventually
help a company develop a good vendor relationship,
with a fruitful win-win partnership
for both the parties.
LITERATURE CITED
1
Shahani, G. and J. Berg, " The ins and outs of
construction contracts, " Hydrocarbon Processing,
December 2019.
JAMES BERG is the CFO at ShureLine Construction.
Previously, he worked for 22 yr at MBNA America
Bank/Bank of America in several financial
management positions. He earned a BA degree
in business administration/economics from the
University of St. Thomas, and an MBA degree from
the University of Delaware.
ASHIM PARMAR is the Plant Engineering Manager
at COIM USA, Inc. He has more than 25 yr of
experience in project management, operations,
maintenance, reliability and startup. His primary
responsibility is ensuring that projects are
completed on time and on budget. Mr. Parmar
is focused on continuous improvement and
digitizing with a value-added approach. He
has previously worked for Eastman Chemicals,
International Flavors and Fragrances, Symrise,
Novartis and Pfizer Pharmaceuticals.
CARL RENTSCHLER is the U.S. Sales Representative
for Al Bassami Industries, a premier steel fabrication
company based in Jeddah, Saudi Arabia. He
has more than 40 yr of varied engineering and
management experience with three international
EPC companies in the power and petrochemical
fields. Mr. Rentschler is a licensed professional
engineer. He earned a BS degree in civil engineering
from Penn State University and an MEng degree
from Cornell University.
GOUTAM SHAHANI retired as Vice President of Sales
and Marketing at ShureLine Construction in 2020.
He has 40 yr of experience in industrial marketing,
business development and asset management at
Air Products, Linde and ShureLine Construction. Mr.
Shahani has more than 60 publications and patents
in the energy and environmental sectors. He earned
BS and MS degrees in chemical engineering, as well
as an MBA. Mr. Shahani is now an adjunct professor
of business and mathematics.
Hydrocarbon Processing | NOVEMBER 2021 35
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